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We won't ever see a 2008 style price drop again. My house was going for $399K before I bought it in 2011 for $199K @ <4%. Unfortunately we got lucky, the big p

We won't ever see a 2008 style price drop again. My house was going for $399K before I bought it in 2011 for $199K @ <4%. Unfortunately we got lucky, the big players in REO weren't ready to 'close' that many packages last time. My first devops role was at a company that was working with big players to make sure next time this exact scenario presented itself the big guys will be able to deploy their cash to gobble these things up.

tossandthrow 1y ago
Risk tends to build up and be released in different ways every time. It is right that it is not likely a credit crisis that will be the trigger next time. But it could be hyperinflation - which would de-facto crash the housing market. Right now the PE value for the housing market is really high, and it is not likely to continue up forever.
LastTrain 1y ago
Go find a graph of housing prices 1963 to current, you will see that the events leading up to and including 2008 did nothing to help or hinder housing affordability in the long run. We are due a 2008 style correction but that will not make housing affordable either. The real problem is that household income stopped outpacing home prices in the 1970s.
- ty6853 1y ago
  The materials are very cheap. Last year I built a house for ~30k shell, about ~60k with utilities and everything inside of it. My own labor. Of course, there are only a handful of counties that will let you do that without licenses, or a building plan, or inspections at times that preclude holding a job. Because there is always some self-righteous actor, screaming at the rooftop that their neighbor is going to kill the whole neighborhood in a fire, no matter that housing has been virtually completely unregulated for owner/builders in my county for 2 decades and none of the hysteria people warned of came to fruition. The plus is all these people screaming for expensive regulations are absolutely scared shitless of my area, and do not live here. Which is nirvana.
  - I-M-S 1y ago
    Which area is this?
    - thijson 1y ago
      Could be here, New Mexico: https://www.youtube.com/watch?v=r9j1Wz89vdc https://www.youtube.com/watch?v=r9j1Wz89vdc Supposedly they don't need any permits. I didn't know there's something called roof grade spray foam.
      - bumby 1y ago
        That’s Arizona, mate.
  - wcarss 1y ago
    That may just be regulatory inertia keeping you safe. Most people aren't building insanely stupid and dangerous homes because in most places they legally can't, and very few work specifically just in your county, so they just do what they mostly do, which is mostly safe and up to code. Maybe they cut a few corners. Probably a few weirdos doing entirely their own thing. By the same token, if your weird neck of the woods made seatbelts non mandatory, it wouldn't mean everyone takes them off as they drive through, so the subsequent maintained levels of vehicular loss of life would say nothing about the increase of safety seatbelts provide. A few weirdos might be taking the belt off, though! Still, it'd only take one weirdo's entirely preventable and lethal to their kids house fire/car crash to prove them idiotic and probably get the law changed.
    - ty6853 1y ago
      Many people and kids die from effects of homelessness yet regulations that make houses less accessible persist, so I'm not confident of your thesis people will fix the laws to save the kids. I would posit one of the best things we could do to save children would be to completely deregulate the housing industry and eliminate trades licensing. This would not only enable housing accessibility but more money for education, healthcare, and good food for kids.
- Workaccount2 1y ago
  The core actual problem is that there are good places to live, and finite land in those places. The next step up "problem" is that the income curve has flattened greatly in the last 75 years. So there are many more high earners mixed in that they are carrying "regular home" prices up with them. In 1967 lower/middle/upper class ratio was 36%/54%/10% In 2019 lower/middle/upper class ratio was 25%/41%/34% The middle class is shrinking because people are getting richer, not poorer. That's the part you never hear people say. Probably because they don't even know it and just assume everyone is broke. I can only imagine now, after the pandemic money shower (not stimulus checks), that this effect is even greater. Hell upper class might actually be at parity with middle class now. [1]https://i.postimg.cc/NjKLYpjF/ulc2on31apqc1.jpg https://i.postimg.cc/NjKLYpjF/ulc2on31apqc1.jpg
  - inetknght 1y ago
    > The core actual problem is that there are good places to live Nah. Climate change is real, and humans can absolutely affect it. Not enough good places to live? Make new ones. It takes decades or centuries but it can be done.
    - Workaccount2 1y ago
      You can't just make new places attractive, they usually are proximal to valuable resources or land features. A dramatic example of this are the arab states that are trying to brute force make the desert an attractive place to be. Nothing in those cities is economically organic, it's all oil money trying to LARP functional cities built in logical locations.
      - ty6853 1y ago
        In my state the people are there because there is water. You can't make new places attractive, because all the people will be dead. It's basically a 100% correlation between location of towns and whether you can economically drill or divert water there.
      - inetknght 1y ago
- wahern 1y ago
  > The real problem is that household income stopped outpacing home prices in the 1970s. On a price per square foot basis, home prices have been remarkably stable since 1960s. The share of income spent on housing has also remained remarkably stable. Though prices have ballooned, interest drops considerably, so monthly payments as share of income haven't changed that much. The way things have gotten worse for people isn't so obvious. For one thing, people have many more choices to spend their money on, such as computers and college. That's created additional pressure on people without the cost of housing itself changing as much as people think, but its a problem someone from 1960 might roll their eyes at. (Hedonistic adaptation?) Then of course there's various income and geographical bifurcations. For example, you can choose to live someplace cheap, but then you're opting out of the highly dynamic and potentially highly lucrative portions of the economy. That's an opportunity cost, but not a literal cost if you're comparing to 1960s lifestyles.
  - LastTrain 1y ago
    >On a price per square foot basis, home prices have been remarkably stable since 1960s. I’m not sure that’s true, in fact I’m quite sure it’s not, but I’m willing to change my mind if you have a good source. In particular, home sizes have shrunk since 00 and prices have surely not gone down so it could only be true prior to then if at all.
    - bumby 1y ago
      It depends on how far you want to go back for comparison. The average house size has grown a lot since the 1960s, but dropped some more recently since the housing crisis. But it’s still up, and by a pretty big margin. In the 1950s, the average house was < 1k sqft, today it’s pushing 2.5x that. It’s even larger when computed on a per-person basis. Census and Statista have some data but this shows a decent chart: https://supplychenmanagement.com/2018/07/15/average-house-size/ https://supplychenmanagement.com/2018/07/15/average-house-si...
    - wahern 1y ago
      I can't find the sources I had from last time I looked into it, but here's are some that corroborate: https://www.census.gov/content/dam/Census/programs-surveys/ahs/working-papers/Housing-by-Year-Built.pdf https://www.census.gov/content/dam/Census/programs-surveys/a... https://compasscaliforniablog.com/have-american-homes-changed-much-over-the-years-take-a-look/ https://compasscaliforniablog.com/have-american-homes-change... Note that the average square footage of news home in 1960s was 1200 sqf, but the average of a 1960s-era home today is 1500 because of additions. Here are some articles with longer discussions: https://moneywithkatie.com/blog/are-houses-more-expensive-or-bigger https://moneywithkatie.com/blog/are-houses-more-expensive-or... https://www.cato.org/blog/questioning-housing-crisis-crisis-or-consumer-preference https://www.cato.org/blog/questioning-housing-crisis-crisis-... If you don't trust the sources of those articles, note that I was skeptical, too (of similar articles I had read), which is why I went looking for primary sources. There's a similar phenomenon with home ownership. The percentage of homeownership has only varied by a few percentage points over the past 60+ years. However, what has changed is the median age of homeowners: they tend to be older. In particular, younger people tend to wait longer to purchase a new home. Now, there's two ways to look at that: they wait longer because they need to spend more time saving money or they wait longer because they want to buy bigger homes or move into more exclusive neighborhoods. And those aren't mutually exclusive. But then there's also the demographic shift toward older Americans generally, which means younger people are competing with older people (with more savings) for homes. The financial pressures are real, it's just that the sources of those pressures are much more complicated than in the popular discourse.
josefresco 1y ago
> We won't ever see a 2008 style price drop again That's what they told me when I bought my $250K condo in the early 2000's. Then in 2008 it was magically worth only $125K after being appraised a year earlier for 350K. Never forget: "The market can remain irrational longer than you can remain solvent"
- VeninVidiaVicii 1y ago
  I’ll go you one further — it seems like every time some prescient comment about the economy gets extremely upvoted, the economy does the literal opposite thing.
  - chasd00 1y ago
    All economic academics need to do is track my stock purchases and use them as a negative indicator :) That strategy would win awards.
  - ethbr1 1y ago
    The economy has a well known penchant for asking others to hold its beer.
- itsoktocry 1y ago
  >Then in 2008 it was magically worth only $125K after being appraised a year earlier for 350K. And what's it worth today? What is the average annual price appreciation since you bought it? Watching "home value" month-to-month is pointless.
  - josefresco 1y ago
    According to Zillow $429K. Of course, what it's "worth" today vs. tomorrow is the issue here. It's the same condo with (seemingly) no improvements. The increase in value is 100% market driven. $429K could be $215K tomorrow. As far as your "month to month" comment - I'm not a real estate investor. Just a guy, with a growing family who went to sell his house in 2008 and was told it was worth less than half of what I paid. It was a setback, we survived, we were fortunate.

tossandthrow 1y ago

Risk tends to build up and be released in different ways every time. It is right that it is not likely a credit crisis that will be the trigger next time. But it could be hyperinflation - which would de-facto crash the housing market. Right now the PE value for the housing market is really high, and it is not likely to continue up forever.

LastTrain 1y ago

Go find a graph of housing prices 1963 to current, you will see that the events leading up to and including 2008 did nothing to help or hinder housing affordability in the long run. We are due a 2008 style correction but that will not make housing affordable either. The real problem is that household income stopped outpacing home prices in the 1970s.

ty6853 1y ago
The materials are very cheap. Last year I built a house for ~30k shell, about ~60k with utilities and everything inside of it. My own labor. Of course, there are only a handful of counties that will let you do that without licenses, or a building plan, or inspections at times that preclude holding a job. Because there is always some self-righteous actor, screaming at the rooftop that their neighbor is going to kill the whole neighborhood in a fire, no matter that housing has been virtually completely unregulated for owner/builders in my county for 2 decades and none of the hysteria people warned of came to fruition. The plus is all these people screaming for expensive regulations are absolutely scared shitless of my area, and do not live here. Which is nirvana.
- I-M-S 1y ago
  Which area is this?
  - thijson 1y ago
    Could be here, New Mexico: https://www.youtube.com/watch?v=r9j1Wz89vdc https://www.youtube.com/watch?v=r9j1Wz89vdc Supposedly they don't need any permits. I didn't know there's something called roof grade spray foam.
    - bumby 1y ago
      That’s Arizona, mate.
- wcarss 1y ago
  That may just be regulatory inertia keeping you safe. Most people aren't building insanely stupid and dangerous homes because in most places they legally can't, and very few work specifically just in your county, so they just do what they mostly do, which is mostly safe and up to code. Maybe they cut a few corners. Probably a few weirdos doing entirely their own thing. By the same token, if your weird neck of the woods made seatbelts non mandatory, it wouldn't mean everyone takes them off as they drive through, so the subsequent maintained levels of vehicular loss of life would say nothing about the increase of safety seatbelts provide. A few weirdos might be taking the belt off, though! Still, it'd only take one weirdo's entirely preventable and lethal to their kids house fire/car crash to prove them idiotic and probably get the law changed.
  - ty6853 1y ago
    Many people and kids die from effects of homelessness yet regulations that make houses less accessible persist, so I'm not confident of your thesis people will fix the laws to save the kids. I would posit one of the best things we could do to save children would be to completely deregulate the housing industry and eliminate trades licensing. This would not only enable housing accessibility but more money for education, healthcare, and good food for kids.
Workaccount2 1y ago
The core actual problem is that there are good places to live, and finite land in those places. The next step up "problem" is that the income curve has flattened greatly in the last 75 years. So there are many more high earners mixed in that they are carrying "regular home" prices up with them. In 1967 lower/middle/upper class ratio was 36%/54%/10% In 2019 lower/middle/upper class ratio was 25%/41%/34% The middle class is shrinking because people are getting richer, not poorer. That's the part you never hear people say. Probably because they don't even know it and just assume everyone is broke. I can only imagine now, after the pandemic money shower (not stimulus checks), that this effect is even greater. Hell upper class might actually be at parity with middle class now. [1]https://i.postimg.cc/NjKLYpjF/ulc2on31apqc1.jpg https://i.postimg.cc/NjKLYpjF/ulc2on31apqc1.jpg
- inetknght 1y ago
  > The core actual problem is that there are good places to live Nah. Climate change is real, and humans can absolutely affect it. Not enough good places to live? Make new ones. It takes decades or centuries but it can be done.
  - Workaccount2 1y ago
    You can't just make new places attractive, they usually are proximal to valuable resources or land features. A dramatic example of this are the arab states that are trying to brute force make the desert an attractive place to be. Nothing in those cities is economically organic, it's all oil money trying to LARP functional cities built in logical locations.
    - ty6853 1y ago
      In my state the people are there because there is water. You can't make new places attractive, because all the people will be dead. It's basically a 100% correlation between location of towns and whether you can economically drill or divert water there.
    - inetknght 1y ago
wahern 1y ago
> The real problem is that household income stopped outpacing home prices in the 1970s. On a price per square foot basis, home prices have been remarkably stable since 1960s. The share of income spent on housing has also remained remarkably stable. Though prices have ballooned, interest drops considerably, so monthly payments as share of income haven't changed that much. The way things have gotten worse for people isn't so obvious. For one thing, people have many more choices to spend their money on, such as computers and college. That's created additional pressure on people without the cost of housing itself changing as much as people think, but its a problem someone from 1960 might roll their eyes at. (Hedonistic adaptation?) Then of course there's various income and geographical bifurcations. For example, you can choose to live someplace cheap, but then you're opting out of the highly dynamic and potentially highly lucrative portions of the economy. That's an opportunity cost, but not a literal cost if you're comparing to 1960s lifestyles.
- LastTrain 1y ago
  >On a price per square foot basis, home prices have been remarkably stable since 1960s. I’m not sure that’s true, in fact I’m quite sure it’s not, but I’m willing to change my mind if you have a good source. In particular, home sizes have shrunk since 00 and prices have surely not gone down so it could only be true prior to then if at all.
  - bumby 1y ago
    It depends on how far you want to go back for comparison. The average house size has grown a lot since the 1960s, but dropped some more recently since the housing crisis. But it’s still up, and by a pretty big margin. In the 1950s, the average house was < 1k sqft, today it’s pushing 2.5x that. It’s even larger when computed on a per-person basis. Census and Statista have some data but this shows a decent chart: https://supplychenmanagement.com/2018/07/15/average-house-size/ https://supplychenmanagement.com/2018/07/15/average-house-si...
  - wahern 1y ago
    I can't find the sources I had from last time I looked into it, but here's are some that corroborate: https://www.census.gov/content/dam/Census/programs-surveys/ahs/working-papers/Housing-by-Year-Built.pdf https://www.census.gov/content/dam/Census/programs-surveys/a... https://compasscaliforniablog.com/have-american-homes-changed-much-over-the-years-take-a-look/ https://compasscaliforniablog.com/have-american-homes-change... Note that the average square footage of news home in 1960s was 1200 sqf, but the average of a 1960s-era home today is 1500 because of additions. Here are some articles with longer discussions: https://moneywithkatie.com/blog/are-houses-more-expensive-or-bigger https://moneywithkatie.com/blog/are-houses-more-expensive-or... https://www.cato.org/blog/questioning-housing-crisis-crisis-or-consumer-preference https://www.cato.org/blog/questioning-housing-crisis-crisis-... If you don't trust the sources of those articles, note that I was skeptical, too (of similar articles I had read), which is why I went looking for primary sources. There's a similar phenomenon with home ownership. The percentage of homeownership has only varied by a few percentage points over the past 60+ years. However, what has changed is the median age of homeowners: they tend to be older. In particular, younger people tend to wait longer to purchase a new home. Now, there's two ways to look at that: they wait longer because they need to spend more time saving money or they wait longer because they want to buy bigger homes or move into more exclusive neighborhoods. And those aren't mutually exclusive. But then there's also the demographic shift toward older Americans generally, which means younger people are competing with older people (with more savings) for homes. The financial pressures are real, it's just that the sources of those pressures are much more complicated than in the popular discourse.

josefresco 1y ago

> We won't ever see a 2008 style price drop again That's what they told me when I bought my $250K condo in the early 2000's. Then in 2008 it was magically worth only $125K after being appraised a year earlier for 350K. Never forget: "The market can remain irrational longer than you can remain solvent"

VeninVidiaVicii 1y ago
I’ll go you one further — it seems like every time some prescient comment about the economy gets extremely upvoted, the economy does the literal opposite thing.
- chasd00 1y ago
  All economic academics need to do is track my stock purchases and use them as a negative indicator :) That strategy would win awards.
- ethbr1 1y ago
  The economy has a well known penchant for asking others to hold its beer.
itsoktocry 1y ago
>Then in 2008 it was magically worth only $125K after being appraised a year earlier for 350K. And what's it worth today? What is the average annual price appreciation since you bought it? Watching "home value" month-to-month is pointless.
- josefresco 1y ago
  According to Zillow $429K. Of course, what it's "worth" today vs. tomorrow is the issue here. It's the same condo with (seemingly) no improvements. The increase in value is 100% market driven. $429K could be $215K tomorrow. As far as your "month to month" comment - I'm not a real estate investor. Just a guy, with a growing family who went to sell his house in 2008 and was told it was worth less than half of what I paid. It was a setback, we survived, we were fortunate.